Tag Archives: Business Management

The dangers inherent within a bureaucratic culture are an abundance of rules that strangle options and cripple the urgency to act.

This past week, with little real news and airtime to fill, the media merry-go-round calliope commonly called the “news cycle” fell back on an old and reliable target by focusing on bureaucratic foul-ups at the Department of Veterans Affairs (VA). With obligatory fanfare, the media dramatically informed us that the VA is hidebound with rules, is as inflexible as set-concrete, lacks a sense of urgency, resists change, fails to meet expectations (set by others) and wastes resources. We also learned that VA employees attempt to hide deficiencies, practice the art of “cover your ass” and shun accountability.

So, should we be shocked, outraged and surprised by this state of affairs at the VA? For all the breathless reporting of the media, isn’t this nothing more than the definition of a bureaucracy?

The Department of Veterans Affairs is the second largest government department, trailing only the Department of Defense (which we all know is free of bureaucratic issues, right?). The VA operates on a budget of almost $100 billion, employs over 300,000 (only 450 of whom are appointed and exempt from Civic Service), manages almost 1,000 various medical facilities spread across the country and is charged with meeting the medical, disability and burial needs of millions of military veterans. In 2013 there were 85,000,000 requests for medical service from the VA.

The intent here is not to condemn or defend the VA, but simply to point out that the ills the media has highlighted are the ills present in any bureaucracy of any size. The reality is that the only way any organization could even attempt to meet the level of responsibility placed on the VA (especially considering budget restrictions enacted by Congress) is by creating rules, process and procedures and generally adopting a “one-size-fits-all” mentality.

By its very nature a bureaucracy is not flexible and certainly not perfect. The truth is that for a bureaucracy as large as VA is, with as many obligations as it has, this unwieldy behemoth does a remarkably good job. Of course there are horror stories at the VA, but they are – considering its scope of responsibility – no greater than horror stories we hear about health insurance companies and private hospitals.

The story here is not that the Department of Veterans Affairs is bad, but that bureaucracy is bad. While a bureaucracy can be good at doing the same thing, the same way all the time, it is inflexible, resistant to change, ignorant of innovation and devoid of both accountability and reward. It is for these reasons that bureaucracy can be so damaging when it takes hold in a private organization that must meet competition, respond to change and innovate if it is to survive. And the media uproar should give thinking business managers a reason to explore what it takes to hold bureaucracy at bay, if we want to achieve and retain success.

And for good reason. Bureaucracy is not the exclusive domain of government organizations. It exists to some degree in nearly all businesses. The more entangling it becomes, the more success is threatened because bureaucracy is not intended to create success; at its best bureaucracy is only intended to preserve the status quo. And in business, preserving the status quo all too often means sacrificing a promising future.

The Battle Against Bureaucracy

There is a lot that goes into resisting and fighting bureaucracy, but there are two principles that are essential for the battle:

Avoid rules whenever possible, and

Always maintain a sense of urgency in all matters.

Instead of being ruled by rules, organizations do better when they are guided by guidelines of engagement. Never lose sight of the fact that rules are for those you don’t trust and guidelines are for those you respect. You give a person a rule and you take away thought and involvement. You give a person a guideline and you stimulate responsibility and accountability.

As a company grows, it’s a tradition to set up rules to tell people what they can and cannot do. Left unchecked, these rules become a crippling straightjacket that stifles the reason why rules were thought needed in the first place. On the other hand, a guideline of engagement defines what a company is about and allows individuals to decide how to go about it to achieve its objectives. Once the guidelines are communicated and agreed upon, individuals are free – actually encouraged – to make their own rules, to operate in a way they feel will best achieve a specific objective.

When an organization is run by rules rather than guidelines, bureaucracy takes hold, responsibility is shunned, accountability is non-existent and an acute lack of urgency takes hold. The rules of bureaucracy become a molasses in the gears of urgency that slows down and eventually kills forward momentum until the very vestige of creative ingenuity simply withers away.

A sense of urgency does not mean making fast decisions: it means working quickly to get the information needed to make a decision. This attitude is an anathema in the bureaucratic culture where the fear of being responsible or accountable creates a desire to delay a decision. Employees simply wait for answers that will never come. In a bureaucracy, this attitude can work because there is no sense of urgency, but in the real life-or-death world of business this is a path to failure.

The challenge to face-down bureaucracy is to instill and retain a sense of urgency. This requires that members of the organization be imbued with the desire to act and move forward. A sense of urgency comes from the top, but it must filter through the entire organization to become a way of thinking and acting. Having a sense of urgency does not mean there is a lack of organization and planning – nor does it mean shooting from the hip. What it does mean is that there is a determination to get things done.

To achieve this sense of urgency, priorities must be clear, consistent, achievable and staunchly supported. Deadlines must be set – held to and met. Those charged with responsibility must be given the authority to do what needs to be done when it needs to be done, and held accountable and rewarded for success. That’s something that never happens in a bureaucracy. And a company without a sense of urgency will soon have a sense of bureaucracy. But with a sense of urgency embedded in the culture of an organization, bureaucracy will never be given the chance to take root.

And the Moral of the Story …

We have seen the media ravage the Department of Veterans Affairs for exhibiting all the signs of an entrenched bureaucracy, all made possible because it is a bureaucracy. Set up as the second largest bureaucracy in government, how can we expect it to be any different? The truth is that as bureaucracies go the VA actually does a pretty good job; especially when compared to the Department of Defense. Certainly the VA is not perfect and some suffer because of that, but that is the essence of a bureaucracy with the same rules and the same size for all is imperfection.

The real lesson to learn here is not the lack of flexibility, the non-existence of a sense of urgency or absence of accountability in the VA, but how to avoid having the same bureaucratic attitudes seep into and control your organization. The best way to achieve that objective and become immune to the ravages of bureaucracy is to set guidelines rather than rules and always demand a sense of urgency.

The presence of trust makes any effort possible. The
absence of trust corrodes any relationship until nothing is possible.

Trust is the most underrated aspect of a business relationship. The presence of trust makes any effort possible. The absence of trust corrodes any relationship until nothing is possible. This is true in any relationship, but building and keeping a unique type of trust in a business relationship is challenging, but also critical to long term success.

Business trust is different than trust in a marriage or the trust we place in a pilot when we board an airplane. I would even differentiate the concept of business trust from the idea of ethics. Not that trust can be built without being ethical, but in the context here, trust has a different nuance. Trust in a business relationship is about many things, but mostly it is about being consistent with those with whom we deal.

Whether dealing with customers, venders, employees or employers, the secret to building business trust is to be what we present ourselves to be. Those we interact with in business don’t have to agree with our philosophy or methods, but if they can count on our consistency, then a bond of trust is created that significantly enhances the chances of success. Be the same today as you were yesterday and will be tomorrow. Trust is built when others can count on what we say as being what we will do.

It does not engender much trust in an organization when management is famous for saying one thing and then doing another. Trust is erroded every time a leader establishes a way to do things and then acts another way. Unfortunately, some companies do not put a high level of importance on establishing trust with employees, vendors or even customers because they don’t believe it to be necessary. It’s an attitude of, “Why do we need trust when we have power?” This way of thinking misses the point.

Many fail to recognize the value of trust in a business relationship, because it is not tangible and does not offer immediate returns. That’s because trust is a process, not a procedure. Trust cannot be bartered nor can it be mandated by any amount of power. True deep-seated trust does not come overnight, but over time. Trust is like a savings account that can be drawn down when time are tough.

Think of trust as a “get out of jail free” card, to be played when needed. A follower may not fully understand the actions or the direction a leader is taking, but if trust is present in the relationship, then the “trust card” can be used to engender committment to the actions and goals of the leader. When a company has built a high level of trust with employees and needs to make a change, it is more likely that employees will accept it, because past experience tells them it is OK to follow – even blindly.

Conversely, without trust any venture will suffer in unimagined ways. Lack of trust breeds suspicion. Those who don’t know who to trust in an organization trust no one. Productivity suffers. Employee morale implodes. Turnover is high, and the ability to attract qualified replacements is restricted. When trust in an organization is lost, the employees tend to adapt a self-preservating attitude that turns their efforts and interests from an organizational focus to a purely personal focus. Trust me, failure is not far behind.

We need to keep reminding ourselves that if we lose the trust of others, be they employees, customers or vendors, no matter what the objective is, it is unlikely others will follow. Attempting to lead without simultaneously building trust from constituent followers is the prescription for a difficult time.

It cannot be stressed enough that trust is engendered through openness, integrity, clarity of expression, and constancy. It’s a product of saying what you’re going to do and then doing it, without changing the principles that set the course. There is no faster way to lose trust than to take actions that signal you are not concerned about the best interests of those you interact with.

Never discount the value of trust. The presence of trust can be a powerful force that enables individuals and organizations to accomplish great things. The absence of trust eats away at the very soul of an organization and paralyzes all effort. For those who seek to achieve success as leaders, business executives or enterpreneurs, the process starts by understanding and respecting the value of trust. And you do this by becoming a dedicated trust builder.

And the Moral of the Story …

Trust is not something that can be seen or touched. Trust cannot be measured until it is tested and if it is found missing when it is needed most it will lead to failure and it will be too late to find and build it. Trust permeates the very essence of leadership and the ability of an organization to function; especially in difficult times. Trust is easy to build and even easier to lose. Trust comes with the consistency of communication, philosophy and actions. People do not have to agree with what a leader does to have trust, but leaders have to do what they say they will do or the trust will be lost. The presence of trust makes even the most difficult effort possible, but the absence of trust makes even the easiest effort difficult. You can put your trust in that truth.

The most important qualification for filling a new job should be the potential for growth, not past experience.

In the practice of law there is a concept called stare decisis. It is a Latin term that means the decisions rendered by a court in previous cases set precedent for how current cases should be decided.

The objective of this principle is to bring consistency, conformity and stability to our legal system. Although there is no legally binding requirement for future courts to follow previous decisions, they invariably do so to avoid the confusion that could result if different courts ruled on similar cases in different ways.

When the Past Fails

As helpful as stare decisis can be in leading to consistent court decisions, it can also result in “bad law.” Since stare decisis looks to the past, not the present or the future to set the criteria for the resolution of issues, it can hinder novel rulings, even when changing social mores suggest that it’s appropriate to do so.

Take the 1896 US Supreme Court ruling in Plessy v. Ferguson. That court ruled that it was constitutional to have segregated public facilities for whites and blacks, so long as they were equal. This allowed those who favored segregation to lean on stare decisis to thwart any subsequent litigation intended to eliminate the practice. It was not until six decades later, when, in 1954, the Supreme Court in Brown v. Board of Education unanimously ruled that “separate but equal facilities were inherently unequal and therefore unconstitutional.” If the Supreme Court had faithfully followed the precedent set by stare decisis, it would have ruled in favor of continued segregation.

There are scores of other examples – women’s rights, voting rights, equal pay, and equal representation, to name a few – where the concept of stare decisis was used in the courts to impede change and progress. As with most humans, judges (and they are almost human) are subconsciously primed to prefer the status quo; to stick to the well-worn path. That’s because most of us — including judges — are more comfortable with consistency and conformity. That can be a good thing, unless it becomes a bad thing. There is a time when it is a good thing – the right thing – to go against the precedent of the way things had been done in the past.

Stare Decisis in Business

In business and the practice of management there is also a form of stare decisis at play. The colloquial term for stare decisis in business is “best practices.” The idea is that the actions of companies and other managers judged to be effective in the past, should serve as a guiding precedent for how companies and managers should act now. The objective of best practices is to avoid mistakes, foster consistency in management activity and eliminate the need to “reinvent the wheel” when it comes to standard business activity.

Just as stare decisis can be effective in setting precedent in law, “best practices” can be an effective guide to setting precedent for efficient management actions—until, that is, it stands in the way of developing and implementing better ways. And unfortunately, that happens all too often in business.

Best practices can become a convenient crutch for the insecure, unimaginative or lazy manager to lean on. The strongest, and ultimately most successful leaders, will be skeptical of the stare decisis of best practices and always be open to finding new approaches that serve the future, not the past.

How Not to fill Your Next Job Opening

One example of a business “best practice” that should be challenged as an outmoded form of stare decisis is the mating dance to find and appoint the right person to fill a job opening. The problem is that in today’s world the established precedent for filling a job opening is upside down and this creates more chance for failure than success.

The most powerful and rarely questioned precedent for filling an open position is to find “the most qualified” individual available. All too often this fixation on the “most qualified,” will lead a company to search outside the organization because of the assumption that the value of experience gained by working for several companies is more valuable than experience with the company seeking to fill the opening.

To facilitate the search for the “most qualified” individual the company will contract with a search firm, collect and scrutinize oodles of resumes and conduct extensive interviews with perspective candidates. Resumes received are prioritized on the basis of the most qualifications and experience, rather than for the most potential for growth. This approach follows set precedent for hiring, but, for a variety of reasons, it is also wrong.

Following this “best practice” is a lazy-way to fill an opening. Sure there is a lot of feverish activity following the precedent to find the most qualified candidate, but the truth is that it is a cop out for what could be a great opportunity to build and strengthen an organization that goes beyond the single task of filling a job opening.

Now, the Right Way to Hire

Two cardinal principles should become the new best practices for hiring the worthiest candidate to fill an opening. To start, every possible effort should be made to make the pending appointment from within the organization. Management should view the need to go outside the organization to find a qualified candidate as an act of desperation and a sign of developmental weakness within its culture; because it is. This type of action sends a message to all in the organization that none of them have the capacity to do the job and that the opportunity for internal development is not a priority of management.

Sure, many managers claim that they initially seek internal candidates and only look outside when it is determined that none are qualified. The problem is that most of these internal “searches” are limited and lack any semblance of creativity. For example, if there is an opening in Human Resources the “job posting” will always list experience in Human Resources as a requirement for the job. This limits the search and eliminates all individuals not currently in HR. Constraining the internal search provides the excuse for management to take the easy way out and rummage for a “highly qualified” candidate from the outside.

The most important new “best practice” should be to change the very definition of the type of candidate management is searching for to fill an opening. Instead of seeking the “most qualified” individual, the search should be to find the one “with the most potential for growth.” Admittedly this approach will make for more work and effort on the part of management, because it will tend to eliminate those who are already fully qualified for the job from an experience standpoint. If someone – especially from outside the company – has the experience of already doing the job, then by definition, there is not much room for growth. If they are willing to take the job, most likely it will be because they are failing, tired of the job they have with another company or they are simply looking for more money.

Finding the candidate with the “most potential” is often resisted because it can create more work – before and after the hire – for the manager. There is a misconception among many managers that once they find and hire the “most qualified” candidate, their job is basically finished. The assumption is that if the new hire is fully qualified to do the job, then all the manager has to do is get out of the way and let them do the job.

On the other hand, if the manager reaches out to find an individual who may have limited – or even no – experience in the new job, but has tremendous upside potential for growth; the manager will have to be closely involved in the support and development of the individual. The decision the find the individual with the “most potential” for growth requires vision, creativity and risk, but by accepting this challenge, the potential rewards for the manager, the individual and the organization are increased dramatically.

The vision is being able to recognize the potential in an individual, despite what experience they may or may not have. The creativity is the willingness to go against precedent and expand the search to all disciplines within the company. Where is the law that says a bright young person in the accounting department can’t – if given the desire, opportunity and support – be an effective leader in marketing? Who says that a talented young person in operations can’t be the perfect person to lead Human Resources? Why can’t a proven leader in Human Resources transfer that talent to operations? Of course, the risk is that these individuals could become a fish out of water and fail, but if they really do have the desire and potential for growth and the manager provides necessary support and development, the risk is significantly mitigated.

The rewards for this type of stare decisis rule-busting are significant: It is likely that most hires will come from within the organization, saving time and money. The individual given the opportunity to grow will be appreciative for the chance and do their best to prove it was the right decision. There will be a strong message sent to the entire organization that the opportunity for growth and development exists within the organization and individuals don’t need to look elsewhere; resulting in higher morale, lower turnover and higher productivity.

What this all boils down to is that successful leaders and managers will acknowledge and respect the stare decisis of business best practices, but they won’t be constrained by them. They will be willing to challenge the precedent of the past in order to create new precedents for the future.

And the Moral of the Story …

The idea of learning from and using past experience as a guideline for actions in the present can be an effective way to save time, reduce risks and create consistency. In law this is called stare decisis. In business it is called best practices. But in both instances the real risk is that being locked into precedent can – and does – constrain the ability and willingness to respond effectively to changed circumstances or to find a better way to do things.

Lawyers can change laws and managers can become successful leaders when they recognize the value of precedent set by stare decisis and best practices, but also understand that neither is prescient for future actions. In truth, often the best way to make a better future is to challenge the precedents of the past.

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If history has taught us anything it is this: Progress or perish. Make history or you are history. Gone. Maybe even forgotten.
This was true of the great empires. They all learned, for better or sometimes worse, that individuals and institutions can make prodigious contributions to history by shaping the future, but when they failed to continue to make history, they became history: We know them now for what they did, not what they are doing.

ABOUT BOB MacDONALD

Founder of LifeUSA Insurance and retired CEO of Allianz Life, N.A., Bob MacDonald regularly blogs with timely, hard-hitting comments on almost every business subject from entrepreneurism to better management, smart business leadership, government and politics, and of course, the life insurance industry.

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Bob MacDonald, founder of LifeUSA Insurance and retired CEO of Allianz Life, N.A., regularly blogs with timely, hard-hitting comments on almost every business subject from entrepreneurism to better
management, smart business leadership, government and politics, and of course, the life insurance industry.